v3.26.3
Discontinued Operations
 9 Months Ended
Sep. 30, 2025
Disposal Group, Including Discontinued Operations [Line Items]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] ote B — Dispositions
Sale of Sterno and Distribution of Rimports
On March 28, 2026, the LLC, in its capacity as representative of the holders of common stock of SternoCandleLamp Holdings, Inc. (“Sterno”), a then-majority-owned subsidiary of the LLC, and, for the limited purposes of the Rimports Distribution described below, entered into a definitive Agreement and Plan of Merger (the “Sterno Agreement”) with WCHG Buyer, Inc. (“Parent”), WCHG Heat Merger Sub, Inc. (“Merger Sub”) and Sterno. Pursuant to the Sterno Agreement, Parent agreed to acquire Sterno through the merger of Merger Sub with and into Sterno, with Sterno surviving the merger as a wholly owned subsidiary of Parent.
Immediately prior to the closing of the merger, on April 30, 2026, Sterno completed the distribution of all of the limited liability company interests of its indirect wholly owned subsidiary Rimports, LLC (“Rimports”), which operates Sterno’s home fragrance business, to Rimports Holdings, Inc., the equity of which was, in turn, distributed pro rata to the Sterno stockholders, including the LLC (the “Rimports Distribution”), with Rimports remaining a majority owned subsidiary of the LLC. On May 1, 2026, the parties completed the merger pursuant to the Sterno Agreement, resulting in the sale of Sterno’s food service business.
The purchase consideration for Sterno’s food service business was based on an enterprise value of $292.5 million and was subject to customary adjustments, including for transaction expenses, change-of-control payments, option termination payments and the net working capital, cash and debt balances of Sterno and its subsidiaries, excluding Rimports and its subsidiaries, at closing. Approximately $2.6 million of the closing proceeds were placed in escrow to satisfy post-closing purchase price true-ups, if any.
After allocation of the purchase consideration to Sterno’s noncontrolling stockholders and payment of transaction costs, CODI received approximately $282 million of total proceeds at closing, representing amounts received with respect to the Company’s outstanding loans to Sterno, including accrued interest, and its equity interests in Sterno.
The Company used the proceeds received from the sale to repay outstanding borrowings under its senior credit facility.
The Rimports Distribution represented a transfer of equity interests between entities under common control because the Company controlled Sterno, inclusive of Rimports, before the distribution and continues to control Rimports after the distribution. Accordingly, the Rimports Distribution was accounted for as a transaction between entities under common control at historical carrying amounts, and no gain or loss was recognized in the Company’s condensed consolidated financial statements as a result of the distribution.
As of March 31, 2026, the Company had classified Sterno’s food service business as held for sale. Because the Company retained Rimports following the Rimports Distribution, the assets and liabilities of Rimports were excluded from the held-for-sale disposal group and continued to be presented within the Company’s condensed consolidated balance sheet. Upon completion of the sale on May 1, 2026, the Company deconsolidated Sterno’s food service business and recognized a gain on the sale of $182.3 million which was reduced by $4.3 million in the third quarter of 2026 primarily to correct the initial allocation of the gain between the controlling and noncontrolling stockholders to reflect the exercise of certain Sterno stock options immediately prior to the transaction, and to reflect the post-closing working capital settlement and other transaction adjustments. The Company recognized a total gain on sale of $178.0 million within income from continuing operations during the nine months ended September 30, 2026.
The sale did not represent a strategic shift that had, or will have, a major effect on the Company’s operations or financial results and therefore did not qualify for discontinued operations presentation. Accordingly, the results of operations and cash flows of Sterno’s food service business through the date of sale, and Rimports for all periods presented, are included within continuing operations in the Company’s condensed consolidated statements of operations and cash flows.
Summarized results of operations of Sterno for the nine months ended September 30, 2026 through the date of disposition and the three and nine months ended September 30, 2025 are as follows (in thousands):
(in thousands)Three months ended 
 September 30, 2025		For the period January 1, 2026 through dispositionNine Months Ended 
 September 30, 2025
Net sales$35,665 $45,125 $107,212 
Gross profit$11,755 $14,096 $34,058 
Operating income$5,777 $8,519 $17,713 
Net income from operations before income taxes (1)
$5,777 $8,511 $17,690 
Provision for income taxes$1,927 $2,084 $5,069 
Net income (1)
$3,850 $6,427 $12,621 
(1) The results of operations for the periods from January 1, 2026 through disposition, and the three and nine months ended September 30, 2025, each exclude $1.4 million, $2.0 million and $6.5 million, respectively, of intercompany interest expense which is eliminated in consolidation.
Lugano
On November 16, 2025, Lugano and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Lugano Bankruptcy”), resulting in the deconsolidation of Lugano. Following deconsolidation, the Company retained equity interests in Lugano at zero fair value and recognized a receivable at fair value for expected recoveries on its secured creditor claim arising from former intercompany loans (the “CODI Secured Claim”). The Company elected the fair value option under Accounting Standards Codification (“ASC”) 825, Financial Instruments, for both the receivable and the retained equity interests, with subsequent changes in fair value recognized in earnings. Upon effectiveness of the Chapter 11 plan of liquidation (the “Plan”) and related settlement, the CODI Secured Claim was satisfied through cash and a special beneficial interest in the Lugano Liquidation Trust.
Upon deconsolidation, the Company recognized the receivable based on management’s estimate of expected recoveries on the CODI Secured Claim and elected the fair value option under ASC 825. The receivable was remeasured at fair value at each reporting date, with changes in fair value recognized in earnings. At December 31, 2025, the receivable had an estimated fair value of $97.0 million, of which $71.0 million was classified as current and $26.0 million was classified as noncurrent. During the three months ended June 30, 2026, management updated its estimate following the Company’s entry on June 24, 2026 into a Settlement Agreement and Mutual Release and a related Plan Support Agreement with Lugano, the official committee of unsecured creditors and the
other parties thereto. The reduction in expected proceeds resulted in a $58.0 million decrease in fair value, reducing the estimated fair value of the receivable to $39.0 million at June 30, 2026, of which $19.2 million was classified as current and $19.8 million was classified as noncurrent.
On August 27, 2026, Lugano filed a preliminary Chapter 11 plan of liquidation (the “Plan”), including the settlement and the Company’s participation percentages in specified recoveries. The preliminary Plan established the Company’s right to 34.79% of specified net inventory, tax-refund and theft-policy insurance proceeds, 45% of net proceeds from specified litigation against a designated third party and 25% of net proceeds from certain other litigation claims. The Bankruptcy Court confirmed the Plan on September 24, 2026, and the Plan became effective on September 30, 2026 (the “Effective Date”). On September 29, 2026, the Company received a $29.8 million Initial CODI Distribution, equal to 34.79% of Effective Date Cash and including the Company’s share of Lugano’s 2024 tax refund. The distribution was received one day before the Effective Date and reduced the receivable to $9.2 million.
On the Effective Date, the Liquidation Trust Agreement was executed, and the Company received a special beneficial interest in the Lugano Liquidation Trust (the “Special Beneficial Interest”) in satisfaction of the remaining CODI Secured Claim. The Special Beneficial Interest represents contractual rights to distributions under the Liquidation Trust Agreement rather than title to the Liquidation Trust’s assets. The Company derecognized the remaining bankruptcy receivable and recognized the Special Beneficial Interest as a new financial asset. The Plan also cancelled the Company’s zero-value Lugano equity interests, which the Company derecognized. The Company elected the fair value option under ASC 825 for the Special Beneficial Interest, with subsequent changes in fair value recognized in other income (expense), net.
At September 30, 2026, the Special Beneficial Interest had an estimated fair value of $9.5 million and was classified as a noncurrent asset in the condensed consolidated balance sheet based on management’s estimate of the timing of expected distributions. During the three months ended September 30, 2026, the Company remeasured the remaining receivable from $9.2 million to $9.5 million and recognized the $0.3 million increase in fair value in other income (expense), net. The Company then derecognized the receivable upon satisfaction of the CODI Secured Claim and recognized the Special Beneficial Interest at its $9.5 million initial fair value. The Level 3 measurement reflects the Company’s 34.79% share of estimated 2021–2023 tax refunds, net of applicable deductions and discounting. No value was ascribed to potential litigation or theft-policy insurance recoveries, the Company’s share of any released Effective Date reserves, or its right to residual proceeds after general unsecured claims are paid in full because of uncertainty regarding amounts, timing, coverage, costs and duration. The timing and amount of ultimate recoveries remain uncertain. Refer to "Note J - Fair Value Measurements" for additional information.
The following table summarizes Lugano's results of operations that are included in the Company's consolidated results of operations for the period from January 1, 2025 through September 30, 2025:
(in thousands)Three months ended September 30, 2025Nine months ended 
 September 30, 2025
Net sales$17,350 $70,966 
Gross profit$13,292 $39,916 
Operating loss$(10,787)$(71,228)
Net loss from operations before income taxes (1)
$(17,160)$(105,089)
Provision for income taxes$— $(256)
Net loss$(17,160)$(104,833)
(1) The results of operations for the three and nine months ended September 30, 2025 exclude $17.1 million and $49.8 million, respectively, of intercompany interest expense which is eliminated in consolidation.